Nepal: Proto-Nationalism Entrapped in the Musical Chair Circle of Political Parties and Floundering Economy

ASIA--PACIFIC, 23 Jun 2025

Kedar Neupane - TRANSCEND Media Service

Part-1: Context and Missed Opportunities

Introduction: Why Nepal’s Universal Image Matters

11 Jun 2025 – How a country is seen both by its own people and by the world, and informed public opinions and perceptions shape the future path of nations. In the commercial and economic world, Nepal’s perception is alarmingly low, almost negative. The global and regional economic landscape has undergone tectonic shifts from the era of the baby boomers of the 1950s to today’s millennials and Gen-Z.

A Location of Opportunity, Wasted by Partisan Politics

Nepal’s location between India and China should have been a blessing. But instead, Nepal’s leaders, policymakers, and classical economists failed to fully grasp the socio-economic and behavioral transformations ushered in by technology, innovation, and the digital revolution. Leadership elites remain locked in an outdated “black-box-thinking” of the past, unable to recalibrate strategies trending with evolving geo-economic order.

Nepal is not geopolitically unique. Its strategic location between two of the world’s largest economies, India and China, should have been a tremendous advantage. Instead, it has been weaponized as a tool of partisan political rhetoric and economic super-nationalism. Political elites have long preached a hollow sense of exceptionalism, glorifying the elusive past and indoctrinating the public into believing that Nepali is an inherently superior, unmatched national. This “out-of-context” narrative has stifled inclusive progress and kept the population trapped in obsolete dogmas that no longer resonate with the aspirations of the new generations.

Centuries ago, King Prithvi Narayan Shah referred to Nepal as a “yam” (root crop “tarul/taro”) between the boulders, a metaphor still widely used in socio-political discourse. However, in the current geo-economic context, Nepal could have redefined itself, not as a passive yam, but as an active economic bridge or umbilical cord, connecting two global economic and political powers. Rather than entrenching itself in ultra-patriotic zeal and political party-driven super-nationalism, Nepal could have pursued forward-looking pragmatic policies to become a credible and dependable economic player regionally.

A Protectionist Mindset Is Failing Us

The path to prosperity is not blocked by geography, but by poor governance and failure to create additional new wealth. Economic prosperity is well within reach, provided the political economy is anchored in good governance, and not fostering state-wide corruption in all branches of institutions. While China, India, and ASEAN countries have pursued policies aligned with evolving global economic trends, Nepal remains wrapped in a narrow, protectionist cloak. It is a strategy based on half-truths, distorted data, and xenophobic nationalism, designed to stir emotional pride rather than deliver tangible results. This self-defeating approach has compromised national security and failed to sustain any meaningful level of economic sovereignty.

The Illusion of SAARC and Regional Irrelevance

Let us admit SAARC has failed. Now is the time for sober reflection. Nepal must urgently adopt pragmatic economic policies to attract long-term private foreign investment, without building bureaucratic and political roadblocks. Failure to do so will only deepen economic vulnerability and compromise food sovereignty further. There is little hope in resurrecting SAARC, which has proven to be a dysfunctional gathering of leaders locked in mutual loggerhead and distrust. It is not, and never was, an economic union. While India has pragmatically moved beyond the SAARC illusion, Nepal remains trapped, stifled by inertia and an entrenched inability to reimagine its potential.

Global Inspirations: What We Can Learn

Singapore and Switzerland provide powerful case studies in national transformation.

Singapore, once a small fishing village surrounded by brackish sea waters and lacking natural resources has risen, within three decades, to become a global hub of maritime shipping, trade, commerce, finance, technology and built corruption-free institutions and the nation. It turned its weakness into strengths and became a symbol of modern economic excellence. Meanwhile, Nepal’s strengths, breathtaking landscapes and natural beauty, hydropower potential, productive young workforce, and strategic location, have been squandered and allowed to become national liabilities, twisting this it into a malediction.

Switzerland, a landlocked country much like Nepal, is surrounded by economic and military giants of Europe. Yet it remained neutral through two world wars and has emerged as a global center for high tech, banking, business, diplomacy, humanitarianism, tourism, and innovation. Beyond other known resources other than dairy farms (some 700,000 cows), snow peaks and scenic lakes, Switzerland has become a beacon of direct democracy and an economic powerhouse. Why can’t Nepal do the same?

Even desert nations like the UAE and Qatar, only with sands and fossil fuels, transformed into high-income economies with capital inflows, strategic investment, and welcoming migrant labor and global partnerships. Similarly, Japan, South Korea, and Singapore, all short on natural resources, achieved development through strategic planning, investment in human capital, and robust international partnerships. Meanwhile, Nepal is wasting remittance money from its struggling migrant workers to feed a bloated and dysfunctional political system that rewards loyalty over merit.

Asia’s Changing Landscape: Nepal Is Missing the Train

Across Asia and closer to home like India, China, Vietnam, Indonesia, Thailand, Malaysia, and the Philippines are embracing economic pragmatism and regional collaboration within ASEAN, accelerating their development with vision and vigor, surpassing expectation.

Even Bangladesh, once seen as hopeless case, quietly joined the growth league, surpassing expectations. Lately, it is attempting to make a transformative political shift that may be costly, and compromise economic growth, over time. This was the unfortunate outcome of excessive lust for power grab combined with limitless political impunity, resembling an autocratic rule of nepotism and corruption. Only few years prior to Bangladesh debacle, analogous situation had turned Sri Lanka back into poverty ebb.

India, despite complex domestic challenges, has cultivated a burgeoning middle class of 470 million and lifted 270 million out of abject poverty. It is recalibrating a fresh approach, moving beyond old nationalist narratives, embracing global markets, and opening strategic sectors to foreign investment. This has spurred an aura of positivity in perception by not emitting contradictory signals of super-nationalism. The has led to massive inflows of capital and technology. Today, India claims to be the world’s second-largest economy by GDP in purchasing power terms, an astounding feat born of policy reform, not of protectionism.

Nepal Today: A Country Stuck in Political Gridlock

Nepal is stuck in corruption and political drama dominating every level of governance. It is mired in political inertia, socio-economic negativism, and pervasive state capture. Governance has become synonymous with dysfunction and impunity. The exposure of the fake Bhutanese refugee scandal, a government-sponsored racket illustrates how deeply rooted corruption has become with the mantra of “rip-the-public” in this tiny republic. These failures have compromised Nepal’s foreign investment climate and worsened conditions for the majority rural population, who struggle with improving quality of life, well-being and joblessness and growing despair.

Nepal’s youth (56% of the population), the dominant segment of the population, see no prospects to grow within their own borders. This has impacted the lower strata of society and created a sense of frustration and hopelessness. Many have already left and more depart every day. Today, one-third of Nepali-origin people live abroad including in India for basic livelihoods. Their remittances keep our economy afloat. But the situation in the home country does not inspire us because the prevailing floundering economy could not inspire and offer little inspiration for return.

The Hydropower Paradox: Rich in Resources, Poor in Progress

Despite being the second poorest country in South Asia (just along Afghanistan, about 25% of rural citizens have reached the national poverty line, and three million remain trapped in multidimensional poverty level. Poverty eradication must remain central to any federal development agenda.

Nepal claims it with one of the world’s richest hydropower reserves and sits next to two nations starving for clean energy. Yet it has not managed to turn this into a perceptible delivery for domestic sustainability and for export growth. Why? The answer lies in political deceit. Elites have overpromised and underdelivered, using populist slogans and false narratives to mask incompetence and preserve political power.

Now, even our natural advantage, Himalayan glacier water, is under threat from climate change. Our agriculture farms do not produce enough staple grains to feed the nation. How long do we wait to take ameliorating steps, ensuring economic sovereignty of the nation?

The Regional Mirror: A Warning from Afghanistan and Pakistan

Lessons abound in the region. Pakistan is trapped in endless political morass and trapped in economic crisis and military bondage. Afghanistan is rich in natural resources but remains in economic quicksand, isolated by rigid sectarian ideology. Nepal risks joining their ranks if it does not urgently free from the cycle of political musical chairs and short-term thinking.

Closing Thought: Time to Reclaim Nepal’s Future

Nepal does not lack potential. It lacks honest visionary statesperson with bold vision, and the courage to let go of comforting myths and glories of past. We live in the present and must think of the future. The younger generation deserves a country that values merit, invites opportunity, and speaks the truth. The time is to act now.

(Continued on Part 2)

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Kedar Neupane is a founding, executive board member of the Nepal Policy Institute, an independent think-tank , a retired senior UN official, and president of ‘We for Nepal’ association based in Geneva, Switzerland where he lives. He has worked in several countries in Africa, the Middle East, Asia and Europe in his 38 years of service with the UN system and was Senior Change Management Advisor to UN High Commissioner for Refugees. Views expressed are his personal analysis and do not represent of institutions. neupanek1950@gmail.com

This article originally appeared on Transcend Media Service (TMS) on 23 Jun 2025.

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